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Everything You Need to Know About Your Credit Score

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No one starts their adult life wanting to have debt and to be in credit, but in this modern age, of growing bills and rising expenses, it’s slowly becoming inevitable. For many people, credit is something they fear but often that’s just due to a lack of understanding. However, as knowledge of the topic improves, more and more people are turning to credit to afford the necessities, and sometimes the luxuries of life. If you need to apply for credit, something that is vital is your credit score. The higher this score, the more likely are your chances of being accepted for credit at the best rates. Your ability to get things like loans, mortgages, credit cards and even mobile contracts depends on this crucial credit score, so evidently it pays to improve it. If you’re a little confused on the subject, hopefully this article will clear things up for you so you can deal with your credit score and improve your chances of getting the personal financial help you need in the future.

What is Your Credit Score?

A credit score is a number on the scale of 300 to 850, 300 being poor and 850 being excellent, that reflects an individual’s creditworthiness, how worthy they are to receive new credit. The higher a person’s score is, the more creditworthy they appear, meaning they will be more attractive to other potential lenders. Your credit score relies on your credit history. This history is the collection of open accounts, totals of debt, repayment records and other factors that shows how trustworthy a person is when it comes to dealing with credit, how reliable they are in repaying their debts. There are several main factors that affect your score, such as your payment history, the amount you owe, the length of your credit history, the types of credit you’ve taken and how many new credit accounts you’ve taken out recently. These factors are things that you can change in order to improve things. 

Why is Your Credit Score Important?

Your credit score can have a big impact on your financial health during your life, either saving you a lot of money or costing you a lot of money. Higher credit scores give you the ability to get lower interest rates, so when you take out credit you will end up paying less over time. If you have a low credit score, you show yourself to be a riskier borrower and this higher liability will make borrowers less likely to lend to you and if they do, the interest rates will be higher, and the repayment term could be shorter. Essentially, your credit score determines what you will be approved for when you apply for future credit, and it will affect how much interest you pay on debts. If you go to make a deposit or even apply for new job, providers and employers are likely to take a look at your credit score to see whether you are reliable or not.

How Can You Improve Your Credit Score?

If you look up your credit score and aren’t happy with the results you see or you face a rejection from a service provider or credit provider due to poor results, don’t feel like you are in an unchangeable situation. There are things you can do to improve your credit score (as an example click here to take a look at an app designed to do just that). Follow some of the steps below and you’ll see a positive improvement in your credit score which will make your future financial plans run a whole lot smoother. Here are ten top tips to boost your credit score:

Ten Top Tips for Improving Your Credit Score

Build up a history.

If you have little or no credit at all, it’s going to be hard for third parties to assess how reliable you are. Young people and those new to the country will have a problem in this regard, but do your best to open a bank account, get a credit card, even take out a small loan to build up a history and get a score boost.

Make payments in a timely manner.

Ensure that you make payments and repayments promptly and on time. This shows that you are a responsible borrower and can handle credit and finances conscientiously.

Give evidence of where you live.

Proving where you live is possible regardless of your living conditions, and this evidence will improve your credit score. 

Lower your credit utilisation.

Credit utilisation is the percentage of your credit limit that you use. The lower percentage you use will be seen as a positive by other lenders which will thus boost your credit score. With this in mind, try to keep your credit utilisation below 30 per cent. 

Check and report any errors on your credit score report.

Even seemingly minor mistakes can have a big impact that results in reducing your credit score and making you a less attractive investment for lenders. 

Use a credit score boosting service.

There are various companies out there that will give you instant credit boosting services.

Try not to move house too often.

While it’s not always possible to avoid, moving home frequently shows a certain level of instability.

Think about getting a credit builder card.

A credit builder card is one with a low spending limit and interest rate and when you use it well, it can help you to slowly improve your credit score over time. 

Keep an eye out for any fraudulent activity on your credit file.

If dangerous fraudsters get hold of your personal details, they could be taking out credit in your name thus affecting your score without your knowledge.

 Show a long history and keep old accounts open. 

If you can prove you can manage many different credit accounts over a long period of time it shows you have a responsible attitude towards money. 

Hopefully with this information, you can feel more confident when dealing with the topic of credit and working on your credit score to improve your financial future.

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